XML 99 R13.htm IDEA: XBRL DOCUMENT

Loans

12 Months Ended

Dec. 31, 2019

The Company accounts for a loan depending on the strategy for the loan and on the credit impaired status of the loan upon acquisition. Loans are accounted for using the following categories:


•	Loans and leases held for sale


•	Loans and leases originated by the Company and held for investment


•	Loans and leases purchased by the Company, which are considered purchased unimpaired (“PUL”), and held for investment


•	Loans and leases purchased by the Company, which are considered purchased credit impaired (“PCI”)

Refer to Note A for further discussion on how the categories above are defined.

Loans are also categorized based on the customer and use type of the credit extended. The following outlines the categories used:

•

Construction and Land Development Loans: The Company defines construction and land development loans as exposures secured by land development and construction (including 1-4 family residential construction), multi-family property, and non-farm nonresidential property where the primary or significant source of repayment is from proceeds of the sale, refinancing, or permanent financing of the property.

•

Commercial Real Estate Loans: Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans. These loans are viewed primarily as cash flow loans and the repayment of these loans is largely dependent on rental income from the successful operation of the property. Loan performance may be adversely affected by factors impacting the general economy or conditions specific to the real estate market such as geographic location and/or property type.


•	Residential Real Estate Loans: The Company selectively adds residential mortgage loans to its portfolio, primarily loans with adjustable rates, home equity mortgages and home equity lines. Substantially all residential originations have been underwritten to conventional loan agency standards, including loans having balances that exceed agency value limitations.

•

Commercial and Financial Loans: Commercial credit is extended primarily to small to medium sized professional firms, retail and wholesale operators and light industrial and manufacturing concerns. Such credits typically comprise working capital loans, loans for physical asset expansion, asset acquisition and other business loans. Loans to closely held businesses will generally be guaranteed in full or for a meaningful amount by the businesses’ major owners. Commercial loans are based primarily on the historical and projected cash flow of the borrower and secondarily on the capacity of credit enhancements, guarantees and underlying collateral provided by the borrower. The cash flows of borrowers, however, may not behave as forecasted and collateral securing loans may fluctuate in value due to economic or individual performance factors. Minimum standards and underwriting guidelines have been established for all commercial loan types.


•	Consumer Loans: The Company originates consumer loans including installment loans and revolving lines, loans for automobiles, boats, and other personal, family and household purposes. For each loan type several factors including debt to income, type of collateral and loan to collateral value, credit history and Company relationship with the borrower are considered during the underwriting process.

The following table outlines net loans balances by category as of:



	December 31, 2019
(In thousands)	Portfolio Loans		PCI Loans		PULs		Total
Loans
Construction and land development	$	281,335	$	160	$	43,618	$	325,113
Commercial real estate	1,834,811		10,217		533,943		2,378,971
Residential real estate	1,304,305		1,710		201,848		1,507,863
Commercial and financial	697,301		579		80,372		778,252
Consumer	200,166		—		8,039		208,205
Total Loans¹	$	4,317,918	$	12,666	$	867,820	$	5,198,404



	December 31, 2018
(In thousands)	Portfolio Loans		PCI Loans		PULs		Total
Loans
Construction and land development	$	301,473	$	151	$	141,944	$	443,568
Commercial real estate	1,437,989		10,828		683,249		2,132,066
Residential real estate	1,055,525		2,718		266,134		1,324,377
Commercial and financial	603,057		737		118,528		722,322
Consumer	190,207		—		12,674		202,881
Total Loans¹	$	3,588,251	$	14,434	$	1,222,529	$	4,825,214
¹Loan balances at December 31, 2019 and 2018 include deferred costs of $19.9 million and $16.9 million, respectively.

Loan accrual status is a primary qualitative credit factor monitored by the Company’s Credit Risk Management when determining the allowance for loan and lease losses. As a loan remains delinquent, the likelihood increases that a borrower is either unable or unwilling to repay. Loans are moved to nonaccrual status when they become 90 days past due, have been evaluated for impairment and have been deemed impaired. The following table presents the balances outstanding status by class of loans as of:



	December 31, 2019
			Accruing 30-59 Days		Accruing 60-89 Days		Accruing Greater Than				Total Financing
(In thousands)	Current		Past Due		Past Due		90 Days		Nonaccrual		Receivables
Portfolio Loans
Construction and land development	$	276,984	$	—	$	—	$	—	$	4,351	$	281,335
Commercial real estate	1,828,629		1,606		220		—		4,356		1,834,811
Residential real estate	1,294,778		1,564		18		—		7,945		1,304,305
Commercial and financial	690,412		2,553		—		108		4,228		697,301
Consumer	199,424		317		315		—		110		200,166
Total Portfolio Loans	4,290,227		6,040		553		108		20,990		4,317,918

PULs
Construction and land development	43,044		—		—		—		574		43,618
Commercial real estate	531,325		942		431		—		1,245		533,943
Residential real estate	201,159		277		—		—		412		201,848
Commercial and financial	78,705		—		—		—		1,667		80,372
Consumer	8,039		—		—		—		—		8,039
Total PULs	862,272		1,219		431		—		3,898		867,820

PCI Loans
Construction and land development	148		—		—		—		12		160
Commercial real estate	9,298		—		—		—		919		10,217
Residential real estate	587		—		—		—		1,123		1,710
Commercial and financial	566		—		—		—		13		579
Consumer	—		—		—		—		—		—
Total PCI Loans	10,599		—		—		—		2,067		12,666

Total Loans	$	5,163,098	$	7,259	$	984	$	108	$	26,955	$	5,198,404



	December 31, 2018
			Accruing 30-59 Days		Accruing 60-89 Days		Accruing Greater Than				Total Financing
(In thousands)	Current		Past Due		Past Due		90 Days		Nonaccrual		Receivables
Portfolio Loans
Construction and land development	$	301,348	$	97	$	—	$	—	$	28	$	301,473
Commercial real estate	1,427,413		3,852		97		141		6,486		1,437,989
Residential real estate	1,044,375		2,524		525		295		7,806		1,055,525
Commercial and financial	594,930		5,186		1,661		—		1,280		603,057
Consumer	189,061		637		326		—		183		190,207
Total Portfolio Loans	3,557,127		12,296		2,609		436		15,783		3,588,251

PULs
Construction and land development	140,013		1,931		—		—		—		141,944
Commercial real estate	680,060		1,846		—		—		1,343		683,249
Residential real estate	260,781		1,523		—		90		3,740		266,134
Commercial and financial	116,173		342		—		—		2,013		118,528
Consumer	12,643		—		31		—		—		12,674
Total PULs	1,209,670		5,642		31		90		7,096		1,222,529

PCI Loans
Construction and land development	135		—		—		—		16		151
Commercial real estate	8,403		1,034		—		—		1,391		10,828
Residential real estate	556		—		—		—		2,162		2,718
Commercial and financial	74		635		—		—		28		737
Consumer	—		—		—		—		—		—
Total PCI Loans	9,168		1,669		—		—		3,597		14,434

Total Loans	$	4,775,965	$	19,607	$	2,640	$	526	$	26,476	$	4,825,214

The reduction in interest income associated with loans on nonaccrual status was approximately $0.4 million, $1.0 million, and $0.7 million, for the years ended December 31, 2019, 2018, and 2017, respectively.

The Company’s Credit Risk Management also utilizes an internal asset classification system as a means of identifying problem and potential problem loans. The following classifications are used to categorize loans under the internal classification system:


•	Pass: Loans that are not problems or potential problem loans are considered to be pass-rated.


•	Special Mention: Loans that do not currently expose the Company to sufficient risk to warrant classification in the Substandard or Doubtful categories, but possess weaknesses that deserve management’s close attention are deemed to be Special Mention.


•	Substandard: Loans with the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.


•	Doubtful: Loans that have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The principal balance of loans classified as doubtful are likely to be charged off.

Risk ratings on commercial lending facilities are re-evaluated during the annual review process at a minimum, based on the size of the aggregate exposure, and/or when there is a credit action of the existing credit exposure. The following tables present the risk category of loans by class of loans based on the most recent analysis performed as of:



	December 31, 2019
(In thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Net Loans
Construction and land development	$	317,765	$	2,235	$	5,113	$	—	$	325,113
Commercial real estate	2,331,725		26,827		20,098		321		2,378,971
Residential real estate	1,482,278		7,364		18,221		—		1,507,863
Commercial and financial	755,957		11,925		9,496		874		778,252
Consumer	203,966		3,209		1,030		—		208,205
Total Net Loans	$	5,091,691	$	51,560	$	53,958	$	1,195	$	5,198,404



	December 31, 2018
(In thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Net Loans
Construction and land development	$	428,044	$	10,429	$	5,095	$	—	$	443,568
Commercial real estate	2,063,589		41,429		27,048		—		2,132,066
Residential real estate	1,296,634		3,654		24,089		—		1,324,377
Commercial and financial	707,663		8,387		6,247		25		722,322
Consumer	198,367		3,397		1,117		—		202,881
Total Net Loans	$	4,694,297	$	67,296	$	63,596	$	25	$	4,825,214

Loans to directors and executive officers totaled $1.7 million and $0.9 million at December 31, 2019 and 2018, respectively. No new loans were originated to directors or officers in 2019.

Concentrations of Credit

The Company's lending activity occurs primarily in Florida, with concentrations in the state's fastest growing markets including the Fort Lauderdale, Boca Raton, Palm Beach, Daytona, Orlando and Tampa markets.

PCI Loans

PCI loans are accounted for pursuant to ASC Topic 310-30. The excess of cash flows expected to be collected over the estimated fair value is referred to as the accretable yield and is recognized in interest income over the remaining life of the loan in situations where there is a reasonable expectation about the timing and amount of cash flows expected to be collected. The difference between the contractually required payments and the cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the nonaccretable difference.

The table below summarizes the changes in accretable yield on PCI loans for the years ended:



	December 31,
(In thousands)	2019			2018			2017
Beginning balance	$	2,924		$	3,699		$	3,807
Additions	—			—			763
Deletions	—			(43		)	(11		)
Accretion	(1,778		)	(1,291		)	(1,647		)
Reclassifications from non-accretable difference	703			559			787
Ending Balance	$	1,849		$	2,924		$	3,699

See Note S for information related to loans purchased in transactions accounted for as business combinations during the periods presented.

Troubled Debt Restructured Loans

The Company’s Troubled Debt Restructuring (“TDR”) concessions granted to certain borrowers generally do not include forgiveness of principal balances, but may include interest rate reductions, an extension of the amortization period and/or converting the loan to interest only for a limited period of time. Loan modifications are not reported in calendar years after modification if the loans were modified at an interest rate equal to the yields of new loan originations with comparable risk and the loans are performing based on the terms of the restructured agreements. Most loans prior to modification were classified as impaired and the allowance for loan losses is determined in accordance with Company policy.

During the twelve months ended December 31, 2019, there were nine loans totaling $4.7 million modified in a TDR. There were four defaults totaling $3.2 million of loans modified in TDRs within the twelve months preceding December 31, 2019. During the twelve months ended December 31, 2018, there were four loans totaling $0.2 million modified in a TDR and there were no payment defaults on loans that had been modified to a TDR within the previous twelve months. During the twelve months ended December 31, 2017, there was one loan totaling $0.1 million modified in a TDR and there were no payment defaults on loans that had been modified to a TDR within the previous twelve months. The Company considers a loan to have defaulted when it becomes 90 days or more delinquent under the modified terms, has been transferred to nonaccrual status, or has been transferred to other real estate owned. A defaulted TDR is generally placed on nonaccrual and a specific allowance for loan loss is assigned in accordance with the Company’s policy.

Impaired Loans

Loans are considered impaired if they are 90 days or more past due, in nonaccrual status, or are TDRs. As of December 31, 2019 and 2018, the Company’s recorded investment in impaired loans, excluding PCI loans, and related valuation allowance was as follows:



	December 31, 2019
	Recorded		Unpaid Principal		Related Valuation
(In thousands)	Investment		Balance		Allowance
Impaired Loans with No Related Allowance Recorded:
Construction and land development	$	4,995	$	5,186	$	—
Commercial real estate	6,070		7,590		—
Residential real estate	9,470		14,182		—
Commercial and financial	3,485		4,475		—
Consumer	111		125		—

Impaired Loans with an Allowance Recorded:
Construction and land development	62		78		14
Commercial real estate	4,196		4,196		220
Residential real estate	4,914		4,914		834
Commercial and financial	2,567		3,115		1,731
Consumer	226		239		59

Total Impaired Loans
Construction and land development	5,057		5,264		14
Commercial real estate	10,266		11,786		220
Residential real estate	14,384		19,096		834
Commercial and financial	6,052		7,590		1,731
Consumer	337		364		59
Total Impaired Loans	$	36,096	$	44,100	$	2,858



	December 31, 2018
	Recorded		Unpaid Principal		Related Valuation
(In thousands)	Investment		Balance		Allowance
Impaired Loans with No Related Allowance Recorded:
Construction and land development	$	15	$	229	$	—
Commercial real estate	3,852		5,138		—
Residential real estate	13,510		18,111		—
Commercial and financial	1,191		1,414		—
Consumer	280		291		—

Impaired Loans with an Allowance Recorded:
Construction and land development	196		211		22
Commercial real estate	9,786		12,967		369
Residential real estate	5,537		5,664		805
Commercial and financial	2,131		2,309		1,498
Consumer	202		211		34

Total Impaired Loans
Construction and land development	211		440		22
Commercial real estate	13,638		18,105		369
Residential real estate	19,047		23,775		805
Commercial and financial	3,322		3,723		1,498
Consumer	482		502		34
Total Impaired Loans	$	36,700	$	46,545	$	2,728

Impaired loans also include TDRs where concessions have been granted to borrowers who have experienced financial difficulty. At December 31, 2019 and 2018, accruing TDRs totaled $11.1 million and $13.3 million, respectively.

Average impaired loans for the years ended December 31, 2019, 2018, and 2017 were $35.6 million, $35.3 million, and $30.9 million, respectively. The impaired loans were measured for impairment based on the value of underlying collateral or the present value of expected future cash flows discounted at the loan’s effective interest rate. The valuation allowance is included in the allowance for loan losses.

Interest payments received on impaired loans are recorded as interest income unless collection of the remaining recorded investment is doubtful, at which time payments received are recorded as reductions in principal. For the years ended December 31, 2019, 2018 and 2017, the Company recorded $2.0 million, $2.0 million, and $1.5 million, respectively, in interest income on impaired loans.

For impaired loans whose impairment is measured based on the present value of expected future cash flows, a total of $0.1 million, $0.2 million and $0.3 million, respectively, for 2019, 2018, and 2017 was included in interest income and represents the change in present value attributable to the passage of time.